Japan’s Economic Future in Doubt: A National Introspective

It’s not been a good year for Japan. China has recently overtaken the Land of the Rising Sun as the world’s second biggest economic power and a recall of over ten million vehicles by one of the nation’s biggest and most respectable companies, Toyota, kicked off a global PR debacle that some analysts predict will take years to recover from.

Add to that Japan’s aging population, its growing national debt and heavy reliance on manufacturing, all of which are effectively killing what was once thought destined to be the world’s leading economic superpower. The departure of its fourth Prime Minister in three years and a nasty diplomatic row with China over the detention of a trawler captain by the Japanese Coast Guard is also hurting.

What’s worse is that Japan’s population is dwindling due to a low fertility rate of just 1.3 children per woman. It is expected that the population will drop from 127 million to just 90 million by 2055, with 40% of that number being over 65s.

As the nation enters its third decade of economic stagnation, university students worry whether they can find steady employment or support their families. A third of Japan’s workforce is temporary workers or “Freeters” that flit from one available job to another. Such workers are unable to qualify for unemployment benefits, and make up more than three-quarters of the nation’s jobless. In these dark times, it’s no wonder -and a sad fact- that more than 30,000 people a year have committed suicides since 1998.

Japan’s Prime Minister, Nato Kan, is aware of the burgeoning crisis. His solution is to open up the country; reducing trade barriers and tariffs and loosening regulations to make the country a more attractive proposition to outside investors. A free trade agreement with the U.S. and other nations, the Trans-Pacific Partnership, is also under consideration. Though it could lead to Japan’s economic revival and cheaper imports, it could also cause significant job losses and social dislocation of the rural classes.

Analysts are convinced that the nation needs to find new growth areas such as green energy, software engineering and health care to help prop up the failing economy. More so, however, Japan needs to change its national mindset. Perceived to be rooted in conformism and census, it is seen by some to be too insular and too slow to change and respond to crisis. Without change, Japan has little hope of a short term recovery.

Of course, this is just one opinion. As always, our readers are encouraged to voice theirs in the comments.

By Tristan Hankins

Source: AP via Yahoo